Santos to Divest Stake in Papua New Guinea LNG Project

SEATTLE (Oil Monster): Santos Ltd. - the Australian oil and gas exploration and production company reached an agreement to divest its stake in liquefied natural gas (LNG) project in Papua New Guinea. The 2.6% stake will be acquired by state-controlled Kumul Petroleum in a deal worth $736m. The transaction is subject to approval by PNG competition regulator.

As per terms of the deal, Kumul Petroleum will make cash payment of $576m and will undertake a project finance debt for the remaining amount of $160m. Additionally, Kumul has reportedly secured a call option to acquire a further 2.4% stake in the project, which will make its total stake in the LNG project to 5%.

The NEC had given initial approval on acquisition to Kumul Petroleum in September last year. The company has been involved in several months of discussions with national as well as international financiers since then. The transaction marks the culmination of these efforts, said Wapu Sonk, Managing Director, Kumul Petroleum.

Meantime, James Marape, Prime Minister, PNG expressed the hope that the transaction will support the government’s policy that the people of PNG must have greater equity interest in their natural resources development projects.